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Attention, Investors: Your Manager Lost You Money, Again

Money managers put up more of the same.

Fool analyst Austin Smith reviews the fiscal year 2012. The S&P 500 was up 16% and hit a five-year high. The Dow was up 7.3%. Most money managers didn't do as well: 65% of large-cap managers underperformed the S&P 500 as did 80% of large-value investors; 67% of small-cap managers didn't beat the Russell 2000 index.

Why was this? Management fees charged by professionals will reduce investor returns. More importantly, money managers may have reacted emotionally to all the bad economic news during the year (Greece, China, the fiscal cliff) and sold stocks prematurely.

What to do? Either buy an index fund or go the Fool route. That is, buy great companies for the long haul. For all the volatility of the markets, Apple was up 31% for the year, Wells Fargo 23.4%, Amazon.com 40%, and 3D Systems 247%. Austin believes buying and holding great companies like these will deliver superior results compared to professional money managers.

Austin Smith owns shares of Apple. The Motley Fool recommends 3D Systems and Apple. The Motley Fool owns shares of 3D Systems and Apple and has the following options: Short Jan 2014 $55 Calls on 3D Systems and Short Jan 2014 $30 Puts on 3D Systems. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.